Published on March 14th, 2019 | by The GC Team0
Dixons Carphone fined £29.1 million for insurance mis-selling
The Financial Conduct Authority has imposed a fine of £29.1 million on Dixons Carphone after concluding that the retailer’s Geek Squad mobile phone insurance selling processes did not meet expected standards.
The investigation, which stemmed from whistleblowing, involved the period from 1st December 2008 to 30th June 2015, in which Carphone Warehouse made regulated sales of Geek Squad policies worth over £444.7 million.
The FCA said Carphone Warehouse sales staff were trained in “spin selling”, where the focus was on persuading customers to purchase Geek Squad and on selling the features of the product.
“No training was provided on how to respond when customers gave answers indicating the policy may not be appropriate. Sales staff were trained in ’objection handling’, with the focus being on overcoming customer objections rather than assessing whether the product was suitable for the customer,” the FCA said.
Customers who said they might have a similar product or wanted to think about it were advised to purchase Geek Squad and cancel in 14 days, creating the risk that they would purchase insurance they did not need and would be exposed to the risk of paying for it if they did not cancel in time.
When customers complained about the sale of Geek Squad, Carphone Warehouse failed to properly investigate and fairly consider their complaints, resulting in valid complaints not being upheld in circumstances where the product had been mis-sold.
Mark Steward, executive director of Enforcement and Market Oversight at the FCA, said: “The Carphone Warehouse and its staff persuaded customers to purchase the Geek Squad product which in some cases had little to no value because the customer already had insurance cover. The high level of cancellations should have been a clear indicator to the management of mis-selling.
“Without whistleblowers coming forward these practices may never have come to light. In the past few years, whistleblowers have contributed critical intelligence to the enforcement actions we have taken against firms and individuals.”
Dixons Carphone said worked closely with the FCA throughout the investigation and accepts that in the past the company’s practices fell short.
Alex Baldock, Group Chief Executive, said: “We’re obviously disappointed that Carphone Warehouse fell short in the past. But we’re a very different business today; as the FCA acknowledges, we’ve made significant improvements since 2015. We’re committed to stay on that trajectory, and to make sure all customers enjoy the right technology products and services for them.”